What is the definition of BTC in different jurisdictions?
Here we provide a simple comparison of definitions in different jurisdictions including Germany, UK, USA, Japan, Canada, China, Singapore, India, Russia, Switzerland, Sweden, Norway, New Zealand, Finland, Brazil, Estonia, and Denmark.
Bitcoin is not classified as e-money or a foreign currency, the Finance Ministry classifies Bitcoin as a “unit of account”, a standard monetary unit of measurement of value/cost of goods, services, or assets. Moreover, it is rather a financial instrument under German banking rules. According to the ministry, it is more akin to “private money” that can be used in “multilateral clearing circles”.
According to HMRC, “Our Policy team’s view is that these are not currency. It is our view that the provision of bitcoins is the sale of vouchers. These are likely to be ‘single purpose’ vouchers.” However, recent news from Bitcoin entrepreneurs’ visit to HMRC seems to be positive that HMRC is considering changing the classification of bitcoins (probably will be recognized as “private money” as well, like in Germany).
FinCEN (Financial Crimes Enforcement Network) guidance states that “virtual currency” is a type of money and should be treated like “real currency”.
However, in a recent development, the FinCEN has issued a ruling that Bitcoin miners and investors will not be regulated by the US Treasury. According to the ruling, people who mine virtual currencies for personal use and businesses that buy and sell virtual currencies purely as an investment will not be considered money transmitters, exempting them from requirements to register with the government and comply with certain money-laundering regulations that it appeared may have applied to them.
Japan does not recognize Bitcoin in any form yet, but the crypto-currency is gaining momentum in the country and there might be an official guideline in the near future.
In defining the identity of Bitcoin, the Canadian authorities tend to call it electronic currency. Additionally, when the currency is used for barter transaction, it is defined as a good that can be used for exchange with other goods. When it comes to trading bitcoins for profit, the currency is defined as a commodity.
In a recent published notice from China’s monetary authority, Bitcoin is defined as ‘not issued and distributed by local authority; without legal currencies’ properties, such as being method of compensation and being mandatory, is not a real currency.’ Bitcoin is characterized as a ‘specific virtual commodity, with no equal legal stance with currency, and should not become a currency like and circulate in the market.’ However, as a certain Internet based transaction, individuals are free to participate in trading bitcoins but have to bear the risks by themselves.
Virtual currencies (VCs), including those from Liberty Reserve and Bitcoin, are not legal tender in Singapore.
Under the Currency Act, the Monetary Authority of Singapore (MAS) has sole right to issue currency notes and coins in Singapore. Further, VCs are not considered as securities under the Securities and Futures Act (SFA). As such, platforms that enable the trading of VCs are not regulated by MAS under the SFA.
Singapore’s central bank, Monetary Authority of Singapore, decided not to not to intervene in the case of businesses that choose to accept the virtual currency Bitcoin as a mode of payment for goods and services.
No recognition of the crypto-currency in the country so far, although there are some indications of bringing Bitcoin within the legal framework.
The Russian Central Bank (CBR) states that virtual currencies or “money surrogates” are illegal under Article 27 of the Federal Law.
The Swiss Parliament is considering a postulate that asks for Bitcoin to be treated as any other foreign currency. The goal of the postulate introduced by representative Thomas Weibel, is to eliminate ambiguities and increase legal certainty related to Bitcoin.
In 2013, FINMA stated in a reference given to a Swiss lawyer that buying Bitcoin online does not relate to buying goods or services but rather means buying a new means of payment for buying goods and services.
Finansinspektionen (”Financial Services Authority”) in Sweden does not consider Bitcoin a currency. Additionally, the Swedish Tax Agency treats Bitcoin as an “electronic service”.
Bitcoin is not qualified as real money, the Norwegian government instead declared Bitcoin to be an asset upon which capital gains tax can be charged.
Crypto-currencies are not currency, or more specifically not legal tender, they are payment systems.
Finland has declared Bitcoin as a commodity, but the Finns can still use it to pay for goods and services.
Any income generated via capital gains is taxed, though losses are not deductible, and Bitcoin mining gains are taxable as income. However, there is no regulatory guidance on any sales tax that could be applicable.
In a recent regulatory change in October 2013, Brazil recognized electronic currencies as a valid mode of payment for agri-businesses.
There is no official stance yet, i.e. Bitcoin is not recognized within the country’s existing legal framework.
Denmark does not recognize Bitcoin yet.